Federal Filing Requirements for Nonprofits

Most charitable nonprofits that are recognized as tax-exempt have an obligation to file an annual information return[1] with the IRS. (There are very few exceptions: church-affiliated organizations and governmental organizations are among those not required to file.) The IRS Form 990 is a public document, so make sure that your nonprofit's board reviews it before it's filed, and that it is completed thoughtfully as well as accurately. Look to the IRS website for guidance on annual reporting[2] of the Form 990. If a nonprofit is incorporated in a state but has never been recognized by the IRS as “tax-exempt,” then it does not have an obligation to file an annual information return with the IRS. Note: Conversely, even if your organization fits one of the few exceptions to mandatory annual filing with the IRS[3], it may still have to file forms annually in the state where it is incorporated, or where it engages in fundraising activities. See information on required state filings[4].

Background

IRS information returns are known as the "990 series[11]" because there are several forms that use the number 990, including Form 990[12], Form 990-EZ[13], and for the smallest nonprofits, Form[5]990-N[5].

The IRS publishes the list[23] of organizations whose tax-exempt status was automatically revoked because of failure to file a required Form 990, 990-EZ, 990-PF or Form 990-N (e-Postcard) for three consecutive years.

Use Form 8868[24] to request an automatic 3-month extension of time to file.

The 990-N due date cannot be extended, but there is no penalty for submitting it late.

Practice Pointer

Should the board review the annual report to the IRS? The redesigned Form 990 asks in Section B, line 11: “Has the organization provided a copy of its Form 990 to all members of its governing body prior to filing the form?” The Form goes on to ask the organization to “describe the process used by the organization to review” the Form 990." As a result, many nonprofits choose to adopt a basic financial policy[34] that requires full board review of the Form 990 before filing with the IRS. Read about other Form 990 good governance practices[35].